Early Call On Chicago

25/11/11 -- The overnight grains were lower with beans ending with losses of around 13-14 cents, corn down 3-5 cents and wheat falling in the region of 3-6 cents. Crude oil is almost a dollar easier and the US dollar is firmer in the usual flight to safety manner.

The eurozone debt crisis continues on it's merry way to oblivion. Italy sold off USD8 billion of six month bills with yields at 6.5%, almost double the rate it paid a month ago. Yields on 2-year bonds are now well past the supposedly unsustainable 7% mark at 7.8% and rising.

Grains have taken a spanking all week and look set to start the day with another beating when Chicago opens this afternoon.

Australia has more wheat than you can shake an excrement smeared stick at, with stocks of 9 MMT as of October 1st, more than 50% higher than a year ago meaning that it's still sitting on around a third of last season's record crop.

It's now in the middle of harvesting another 26-27 MMT crop with yields better than expected in places, and as expected in others. Quality seems to be below par and there could be some weather damage again east SA, Victoria & NSW, my buddy Corey over there tells me.

Despite remaining aggressive sellers ending stocks are still likely to be above 8 MMT at the end of the new season, the IGC said yesterday.

Ukraine's grain harvest now stands at 56 MMT with just 8% of the nation's corn left to cut. They're likely to end up with a corn crop of around 22 MMT in bunker weight, of which they'll be looking to export 10-12 MMT compared to 5 MMT last season.

That will compete head-to-head with US corn and Ozzie feed wheat into Asia.

Chicago wheat hasn't been this low since news of the Russian drought was all over the media in July 2010. Beans are "knock, knock, knocking on eleven's door" as one wag put it on Twitter this morning, we haven't been down there since October 2010. Corn is at it's lowest levels of the year.

Funds/investors are piling out of the grains so the market can only go one way as long as this exodus continues. That's all you need to know.

US weekly export sales for wheat were better than the expected 300 to 450 TMT at 614,500 MT. Sales aren't exports until they been shipped though, and shipments failed to hit the 477 TMT needed to match the USDA's export target for the sixth week in seven coming in at 362,600 MT.

Corn sales fell below expectations for the third week in a row at 312,000 MT for 2011/2012 and 38,000 MT for delivery in 2012/2013. Weekly shipments of 973,900 MT were however a marketing year high.

Soybean sales and shipments were robust at 921,600 MT and 991,700 MT respectively. China accounted for more than 80% of those exports. You have to wonder therefore just how sharply US shipments will drop off once South America starts harvesting in the New Year.

Early calls for this afternoon's CBOT session see beans down 13-15 cents, corn down 3-5 cents and wheat down 4-6 cents.